Equities still king as cash takes back seat in 2012

Wednesday 14th March 2012

As interest rates remain at an historic low for a record three years, ISA investors have revealed they remain disillusioned with returns on cash investments, and continue to take a bullish approach to investing in equities. According to research by Barclays Stockbrokers, almost a third of respondents (30%) have further diversified away from cash to equities as a means to gain returns in the current environment.

The survey, conducted among Barclays Stockbrokers ISA clients, found more than three-quarters (77%) have invested in an equity ISA this tax year (2011/2012). A third (36%) have already taken full advantage of this tax year's allowance of £10,680, specifically because they were seeking better returns than those available from cash. According to the survey, two-thirds of respondents (65%) said they always used their full ISA allowance every year, and of those who have not yet invested in an ISA yet this tax year, 55% still intend to do so before April 5.

The research also found investors are looking to take control of their investment decisions. For Barclays Stockbrokers clients, it is the flexibility offered by the range of investments that can be held in their investment ISA that is important and the majority of respondents (89%) say they value the ability to make their own decisions to build a portfolio that suits them. Almost half (46%) say they use equity ISAs because they always know how and where their money is invested.

Catherine Penney, Product Manager, Barclays Stockbrokers, said: "In the current economic climate, inactivity certainly won't be rewarded. The Bank of England has held the base rate at 0.5% for three years and our research shows that the low interest rate environment has prompted investors to reassess their investment decisions.

"In these challenging market conditions it is even more important that investors review their existing ISA investments, including those made several years ago, to ensure that their investments are working as hard as possible. Key to taking control and to maximising returns is the provider of these investments - the widest range of investments, convenience, service and price should top the list of considerations for the smart investor.

"While the countdown is on for investors to make the most of the £10,680 ISA allowance this tax year, they should also be aware that the annual limit increases to £11,280 from April 6, giving even more opportunities to take advantage of these tax-free benefits."